PetMed Express D/B/A 1-800-PetMeds Announces Second Quarter Financial Results

Monday, October 20, 2008 8:22 AM

Earnings Increase 33% to $0.25 Diluted Per Share

Net Sales Increase 16% to $59.6 Million

Reorder Sales Increase 18%

PetMed Express, Inc. (NASDAQ:PETS) today announced its financial results for the quarter ended September 30, 2008. Net income was $5.8 million or $0.25 diluted per share for the quarter ended September 30, 2008, compared to net income of $4.5 million or $0.18 diluted per share for the quarter ended September 30, 2007, an increase to earnings per share of 33%. For the six months ended September 30, 2008, net income was $12.4 million or $0.53 diluted per share compared to net income of $10.7 million or $0.44 diluted per share for the six months ended September 30, 2007, an increase to earnings per share of 20%. Net sales for the quarter ended September 30, 2008 were $59.6 million, compared to $51.5 million for the quarter ended September 30, 2007, an increase of 16%. Net sales for the six months ended September 30, 2008 were $127.9 million, compared to $110.6 million for the six months ended September 30, 2007, also an increase of 16%.

Menderes Akdag, President and CEO, commented: “We are pleased to report that we had a highly profitable quarter by reducing operating expenses as a percentage of sales by 200 basis points compared to the same quarter last year. Our reorder sales increased by 18%, from $35.0 million to $41.4 million for the quarters ended September 30, 2007 and 2008, respectively, and for the six months ended September 30, 2008 our reorder sales increased by 17%, to $87.6 million, compared to $75.0 million for the six months in the prior year. Our new order sales increased by 11% to $18.2 million for the quarter ended September 30, 2008, compared to $16.5 million for the same quarter the prior year. We are also pleased to report that our net cash from operations increased by 45% to $18.7 million for the six months ended September 30, 2008 from $12.8 million for the same period the prior year. Our continuing focus will be on capturing additional market share, and improving reorders and our customer service levels in fiscal 2009. Additionally, the Company repurchased approximately 90,000 shares of its outstanding common stock for approximately $1.1 million during the second quarter of fiscal 2009.”

This morning at 8:30 A.M. Eastern Time, Mr. Akdag will host a conference call to review the quarter’s financial results. To access the call which is open to the public, dial (888) 455-1758 (toll free) or (210) 234-0009. Callers will be required to supply PETMEDS as the passcode. For those unable to participate in the live event, the call will be available for replay from 10 A.M. on October 20, 2008 until November 3, 2008 at 10:59 P.M. To access the replay, call (866) 462-8984 (toll free) or (203) 369-1369, and enter passcode 5500.

Founded in 1996, PetMed Express is America’s Largest Pet Pharmacy, delivering prescription and non-prescription pet medications and other health products for dogs, cats, and horses at competitive prices direct to the consumer through its 1-800-PetMeds toll free number and on the Internet through its website at www.1800petmeds.com.

This press release may contain “forward-looking” statements, as defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission, that involve a number of risks and uncertainties, including the Company’s ability to meet the objectives included in its business plan. Important factors that could cause results to differ materially from those indicated by such “forward-looking” statements are set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the PetMed Express Annual Report on Form 10-K for the year ended March 31, 2008. The Company’s future results may also be impacted by other risk factors listed from time to time in its SEC filings, including, but not limited to, the Company's Form 10-Q and its Annual Report on Form 10-K.

For investment relations contact PetMed Express, Inc., Bruce S. Rosenbloom, CFO, 954-979-5995.

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

		September 30, 2008		March 31, 2008
		September 30, 2008		March 31, 2008
		(UNAUDITED)
ASSETS

Current assets:
Cash and cash equivalents	$	28,967,135	$	20,267,829
Temporary investments		23,625,000		4,780,000
Accounts receivable, less allowance for doubtful accounts of $41,340 and $32,040, respectively		2,030,071		1,575,263
Inventories - finished goods		14,583,895		17,909,549
Prepaid expenses and other current assets		1,415,362		691,859
Income taxes receivable		517,967		-
Total current assets		71,139,430		45,224,500

Long term investments		14,650,000		24,740,000
Property and equipment, net		1,940,566		1,903,294
Deferred income taxes		1,179,152		1,221,853
Intangible asset		365,000		365,000

Total assets	$	89,274,148	$	73,454,647

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable	$	7,900,669	$	4,358,774
Income taxes payable		-		185,243
Accrued expenses and other current liabilities		2,068,272		1,876,655

Total liabilities		9,968,941		6,420,672

Commitments and contingencies

Shareholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized;
2,500 convertible shares issued and outstanding with a
liquidation preference of $4 per share		8,898		8,898
Common stock, $.001 par value, 40,000,000 shares authorized;
23,772,528 and 23,734,067 shares issued, respectively		23,773		23,734
Additional paid-in capital		8,190,887		8,396,277
Retained earnings		71,081,649		58,639,343
Less treasury stock, at cost; 0 and 3,100 shares, respectively		-		(34,277	)

Total shareholders' equity		79,305,207		67,033,975

Total liabilities and shareholders' equity	$	89,274,148	$	73,454,647

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

		Three Months Ended September 30,				Six Months Ended September 30,
		Three Months Ended September 30,				Six Months Ended September 30,
		2008		2007		2008		2007

Sales	$	59,569,141	$	51,537,197	$	127,935,824	$	110,564,432
Cost of sales		36,710,850		31,882,937		79,287,231		68,214,788

Gross profit		22,858,291		19,654,260		48,648,593		42,349,644

Operating expenses:
General and administrative		5,617,034		5,344,320		11,429,248		10,959,786
Advertising		8,659,586		8,072,127		18,719,709		16,554,908
Depreciation and amortization		162,076		151,715		317,628		279,649
Total operating expenses		14,438,696		13,568,162		30,466,585		27,794,343

Income from operations		8,419,595		6,086,098		18,182,008		14,555,301

Other income:
Interest income, net		352,403		481,051		661,718		873,253
Other, net		169,068		193,274		329,451		424,930
Total other income		521,471		674,325		991,169		1,298,183

Income before provision for income taxes		8,941,066		6,760,423		19,173,177		15,853,484

Provision for income taxes		3,119,969		2,234,697		6,730,871		5,144,674

Net income	$	5,821,097	$	4,525,726	$	12,442,306	$	10,708,810

Net income per common share:
Basic	$	0.25	$	0.19	$	0.53	$	0.44
Diluted	$	0.25	$	0.18	$	0.53	$	0.44

Weighted average number of common shares outstanding:
Basic		23,485,477		24,214,543		23,504,284		24,182,110
Diluted		23,669,854		24,467,039		23,670,893		24,401,570

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

		Six Months Ended September 30,
		Six Months Ended September 30,
		2008			2007
Cash flows from operating activities:
Net income	$	12,442,306		$	10,708,810
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		317,628			279,649
Share based compensation		679,785			792,637
Deferred income taxes		42,701			(344,981	)
Bad debt expense		39,288			22,870
(Increase) decrease in operating assets and increase (decrease) in liabilities:
Accounts receivable		(494,096	)		(188,791	)
Inventories - finished goods		3,325,654			1,136,121
Prepaid income taxes		(517,967	)		(1,207,496	)
Prepaid expenses and other current assets		(723,503	)		102,244
Accounts payable		3,541,895			1,421,929
Income taxes payable		(185,243	)		(229,321	)
Accrued expenses and other current liabilities		191,617			356,318
Net cash provided by operating activities		18,660,065			12,849,989

Cash flows from investing activities:
Net change in investments		(8,755,000	)		(5,725,000	)
Purchases of property and equipment		(354,900	)		(314,200	)
Net cash used in investing activities		(9,109,900	)		(6,039,200	)

Cash flows from financing activities:
Purchases of treasury stock		(2,191,976	)		(2,504,056	)
Proceeds from the exercise of stock options		1,230,738			2,585,593
Tax benefit related to stock options exercised		110,379			181,473
Net cash (used in) provided by financing activities		(850,859	)		263,010

Net increase in cash and cash equivalents		8,699,306			7,073,799
Cash and cash equivalents, at beginning of period		20,267,829			316,470

Cash and cash equivalents, at end of period	$	28,967,135		$	7,390,269

Supplemental disclosure of cash flow information:

Cash paid for income taxes	$	7,281,000		$	6,745,000

Retirement of treasury stock	$	2,226,253		$	2,452,956

PetMed Express, Inc., Pompano Beach
Bruce S. Rosenbloom, CFO, 954-979-5995

(Source: Business Wire )

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